Is it a better idea to add tail_sampling to the signoz otel_collector or in an otel_collector further upstream?

You would want to add it to a layer where all the spans from different applications arrive. How does your current setup look like?

I have applications that publish traces to an otel collector that adds some additional attributes and then publishes it to the signoz otel collector

I am assuming this must be some sort of agent collector running alongside the application? You can do it further upstream as long as you are sure that spans would be available in that collector to make a decision.